The Impact of Social Liberalization on Female Entrepreneurship

Abstract

Although the impact of institutional change on entrepreneurship is well documented, little is known about how institutional changes influence the creation of high-growth ventures founded by female entrepreneurs. By implementing the difference-in-differences approach, this study examines the impact of a socially liberal policy (i.e., legalization of same-sex marriage) on female entrepreneurship. We show that social liberalization policies may increase the creation of high-growth ventures by female entrepreneurs. We also show that when ethnic minorities are more prevalent, the positive effect of social liberalization on female-founded high-growth ventures is stronger, but that this positive effect might not be driven by necessity entrepreneurship. A supplementary analysis with a funding round level sample shows that after controlling for ventures, founders, and industry characteristics, social liberalization tends to increase the amount of early-stage funding that women entrepreneurs receive. This study extends prominent literature on female entrepreneurial entry and offer practical implications for policymakers by shedding lights on the impact of social liberalization on the entry of women to entrepreneurship. This study also extends the emerging literature examining the effect of an institutional change on certain types of entrepreneurship by showing that an institutional change can foster female-founded high growth ventures.